SECURITY BANK Corp. has set up a medium-term note (MTN) facility of up to $1 billion as it seeks to tap offshore capital markets for financing.
In a regulatory filing on Thursday, the listed lender said it has established an MTN program worth $1 billion or its equivalent in other currencies. The program is expected to be listed on the Singapore Stock Exchange.
Security Bank has mandated Citigroup, CLSA, MUFG and UBS as joint lead arrangers for the program.
With the establishment of the note facility, the lender said it will “gain the flexibility to tap the international debt capital markets” which is subject to market conditions.
The MTN program will broaden the base of Security Bank for fund raising. The notes are offered on a continuing basis until the ceiling is reached.
Global debt watcher Moody’s Investors Service has assigned a (P)Baa2 long-term foreign currency senior unsecured rating to Security Bank’s note issuance, matching the debt rating of the Philippine government and a notch above the minimum investment grade.
Moody’s said the rating reflects the baa3 baseline credit assessment of the bank, underpinned by its “above-industry-average asset quality and strong capital buffers, boosted by a capital infusion from its new strategic partner, MUFG Bank, Ltd.”
In April 2016, Security Bank received additional capital of P36.9 billion from the Japanese lender.
In turn, the local bank issued the foreign lender 150.7 million common shares and 200 million preferred shares, representing MUFG Bank’s 20% ownership of the bank.
Recently, local banks have been conducting various fundraising activities to expand their networks and beef up their capital buffers.
On Wednesday, Bank of the Philippine Islands raised $600 million through a drawdown from its $2-billion MTN program, which fetched a 4.25% coupon.
Philippine National Bank and Rizal Commercial Banking Corp. have also tapped the foreign debt market recently, raising $300 million and $150 million, respectively, from their own medium-term note facilities.
Security Bank booked a net income of P4.3 billion in the first semester, down 18% from the year-ago level primarily due to a continued decline in trading gains.
Shares in Security Bank closed unchanged at P199.90 apiece on Thursday. — Karl Angelo N. Vidal